Pennantpark Floating Rate Capital (PFLT) & Firsthand Technology Value Fund (SVVC) Critical Analysis

Pennantpark Floating Rate Capital (NASDAQ:PFLT) and Firsthand Technology Value Fund (NASDAQ:SVVC) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.

Risk & Volatility

Pennantpark Floating Rate Capital has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, Firsthand Technology Value Fund has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.

Earnings and Valuation

This table compares Pennantpark Floating Rate Capital and Firsthand Technology Value Fund’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pennantpark Floating Rate Capital $72.21 million 6.97 $33.49 million $1.06 12.25
Firsthand Technology Value Fund $3.47 million 25.16 $19.87 million N/A N/A

Pennantpark Floating Rate Capital has higher revenue and earnings than Firsthand Technology Value Fund.

Insider & Institutional Ownership

36.2% of Pennantpark Floating Rate Capital shares are owned by institutional investors. Comparatively, 4.6% of Firsthand Technology Value Fund shares are owned by institutional investors. 1.0% of Pennantpark Floating Rate Capital shares are owned by company insiders. Comparatively, 4.5% of Firsthand Technology Value Fund shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Pennantpark Floating Rate Capital pays an annual dividend of $1.14 per share and has a dividend yield of 8.8%. Firsthand Technology Value Fund does not pay a dividend. Pennantpark Floating Rate Capital pays out 107.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Pennantpark Floating Rate Capital and Firsthand Technology Value Fund, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pennantpark Floating Rate Capital 0 0 2 0 3.00
Firsthand Technology Value Fund 0 0 0 0 N/A

Pennantpark Floating Rate Capital presently has a consensus target price of $14.25, suggesting a potential upside of 9.70%. Given Pennantpark Floating Rate Capital’s higher probable upside, equities research analysts plainly believe Pennantpark Floating Rate Capital is more favorable than Firsthand Technology Value Fund.

Profitability

This table compares Pennantpark Floating Rate Capital and Firsthand Technology Value Fund’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pennantpark Floating Rate Capital 45.40% 8.24% 4.50%
Firsthand Technology Value Fund 573.04% -4.59% -4.19%

Summary

Pennantpark Floating Rate Capital beats Firsthand Technology Value Fund on 8 of the 13 factors compared between the two stocks.

About Pennantpark Floating Rate Capital

PennantPark Floating Rate Capital Ltd. is a business development company. It seeks to make secondary direct, debt, equity, and loan investments. The fund seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies. It primarily invests in the United States and to a limited extent non-U.S. companies. The fund typically invests between $2 million and $20 million. The fund also invests in equity securities, such as preferred stock, common stock, warrants or options received in connection with debt investments or through direct investments. It primarily invests between $10 million and $50 million in investments in senior secured loans and mezzanine debt. It seeks to invest in companies not rated by national rating agencies. The companies if rated would be between BB and CCC under the Standard & Poor's system. The fund invests 30% is invested in non-qualifying assets like investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million, securities of middle-market companies located outside of the United States, high-yield bonds, distressed debt, private equity, securities of public companies that are not thinly traded, and investment companies as defined in the 1940 Act. Under normal conditions, the fund expects atleast 80 percent of its net assets plus any borrowings for investment purposes to be invested in Floating Rate Loans and investments with similar economic characteristics, including cash equivalents invested in money market funds. It expects to represent 65 percent of its portfolio through senior secured loans. In case of floating rate loans, it holds investments for a period of three to ten years.

About Firsthand Technology Value Fund

Firsthand Technology Value Fund, Inc. is a business development company specializes in investments in start-up, late, development stage, and PIPEs. It seeks to invest in pre-IPO companies. The fund also seeks to make investments in companies with operating histories that are unprofitable or marginally profitable, that have negative net worth, or that are involved in bankruptcy or reorganization proceedings. In addition, it also makes investments in connection with the acquisition or divestiture of companies or divisions of companies. The fund seeks to invest through direct investments in private companies, negotiations with selling shareholders, and in organized secondary marketplaces for private securities. It may also invest in micro-cap publicly traded companies and also make investments in securities of public companies. The fund seeks to invest in private technology, information technology, cleantech sector, and companies that possess patents and other defensible intellectual property rights with a focus on Internet, consumer electronics, computer hardware, computer software, social networking, computer peripherals, solar photovoltaic, energy efficiency, solid-state lighting, water purification, wind-generated electricity, fuel cells, bio-fuels, electronic components, semiconductors, telecommunications, and advanced materials. Cleantech companies include those engaged in the sale of goods and services designed to harness renewable energy and materials, eliminate emissions and waste, and reduce the use of natural resources. It invests primarily in equity securities of private companies in the United States. However the fund also invests in securities of public companies located outside of the United States. It seeks to invest between $1 million and $10 million each in its investee companies. The fund structures its equity investments as preferred stock, common stock, warrants, limited partnership interests, options, other beneficial ownership interests, convertible debt, short term debt investments, high-yield bonds, and distressed debt. It prefers to control, be represented on, or have observer rights on the board of directors of a portfolio company. The fund seeks to exit its investments through strategic acquisition by other industry participants, initial public offering of common stock, or other capital market transaction.

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